Exam 6: Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Nancy purchased a computer on July 15,2017,for $5,000.The computer was used 70% of the time in her business and the rest of the time her children used the computer to surf the Web.In 2017,the computer was used 40% for business and 60% for personal use.What are the cost recovery deductions for 2017 and 2018? (No §179 or bonus).Is there any recapture of depreciation in 2017?

If an activity is characterized as a hobby,expenses are deductible only to the extent of income from the hobby,subject to certain ordering rules.

A business bad debt is treated as a short-term capital loss and can be deducted only when it becomes completely worthless.

Describe each of the depreciation conventions and when each is applicable.

During 2017,Regina,a sole proprietor,had the following income and expenses from her home jewelry business.Regina is also employed as an office assistant at a local business: W-2 wages from employer \2 8,000 Proceeds from jewelry sales 15,000 Supplies for jewelry 5,000 Travel for jewelry 1,400 Charitable contributions to church 3,000 a.What income or loss should be reported on Schedule C? b.What is Regina's AGI?

Chris runs a business out of her home.She uses 500 square feet of her home exclusively for the business.Her home is 2500 square feet in total.Chris had $36,000 of business revenue and $32,000 of business expenses from her home business.The following expenses relate to her home: Mortgage interest \ 12,400 Real estate taxes 1,800 Repairs 3,200 Utilities 2,600 Insurance 650 Depreciation (on business use portion of home) 1,750 What is Chris' net income from her business and the amount of expenses carried over to the following year,if any? Net income $\quad$$\quad$ Carryover a. $0 $\quad$$\quad$$\quad$$\quad$ $1,880 b. $0 $\quad$$\quad$$\quad$$\quad$ $0 c. $4,000 $\quad$$\quad$$\quad$ $4,130 d. $36,000 $\quad$$\quad$$\quad$ $0

Cole purchased a car for business and personal use.In 2017,he used the car 60% for business (13,000 total use miles)and used the standard mileage rate to calculate his vehicle expenses.He also paid $1,500 in interest and $360 in county property tax on the car.What is the total business deduction related to business use of the car rounded to the nearest dollar?

If property is inherited,the property's basis for purposes of depreciation is the same as the decedent's basis.

Shante is employed by a local pharmaceutical company where she earned $48,000 in 2017.During the year,she also had self-employment income of $18,000.Her self-employment tax rounded to the nearest dollar is:

What form is filed to report the self-employment tax?

Which of the following is not a "trade or business" expense?

Katherine earned $100,000 from her job at a local business in 2017.She also had $42,000 in self-employed consulting income.What is the amount of her self-employment tax rounded to the nearest dollar?

When business property is lost in a fire,storm,shipwreck,theft,or other casualty,the taxpayer normally receives a capital loss deduction.

Under MACRS,5-year property includes:

Once the more-than-50% business-use test is met for listed property,it does not matter if the business use falls below 50% in subsequent years.

If an activity is considered a hobby,which of the following is true?

Ted purchased a vehicle for business and personal use.In 2017,Ted used the vehicle 70% for business (10,000 business miles)and used the standard mileage rate to calculate his vehicle expenses.Ted also paid $1,200 in interest and $380 in county property tax on the car.What is the total business deduction related to business use of the car in 2017?

Bart has the following income and expenses for his Schedule C: 1099-MISCsreceived: Jack's Builder's \4 2,000 Smith's Fine Homes 35,750 Murphy's Builders 24,730 Total Revenue \1 02,480 Wages (46,000) Payroll taxes (3,519) Payroll tax penalties (300) License fee (200) Supplies (5,300) Cell phone (588) Meals (3,000) Internet service (780) What is Bart's self-employment income?

List and define the criteria for an expenditure to be deductible on Schedule C.

Kiri acquires equipment (7-year property)on August 14,2017,for $80,000.She does not elect to expense the asset under Section 179 or the 50% bonus.She sells the asset on January 15,2021. a.What is Kiri's cost recovery deduction related to the equipment in 2017 and 2021? b.What is Kiri's cost recovery deduction related to the equipment in 2017 and 2021 if the 50% bonus is elected?